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Zimbabwe’s GDP seen at 2,8pct in 2017, inflation to accelerate

By Kuda Chideme, HARARE, June 21 (The Source) – Zimbabwe’s economy will grow by 2.8 percent this year, lower than the government projection of 3,7 percent spurred by increased output in agriculture, the World Bank said on Wednesday.

The southern African nation is recovering from a severe drought in the 2015/6 season — which left more than 4 million people requiring food aid — and is expecting to harvest over two million tonnes of grain, more than enough to meet the country’s demand estimated at 1,8 million tonnes.

In an economic update on Zimbabwe the bank said the good rains experienced this year and a revitalized agriculture sector — which government attributes to its its ambitious special maize production ‘command agriculture’ scheme — will underpin GDP growth in 2017.

“Favourable rains during the 2016/17 agricultural season are expected to drive a robust recovery, and the agricultural sector is projected to make a sizeable contribution to GDP growth in 2017,” the bank said.

“However, the incomplete implementation of fiscal adjustment policies and structural reforms, and the possibility that a rising money supply will boost inflation, are likely to dampen Zimbabwe’s medium term growth outlook.”

World Bank economist Johannes Herdesche said the growth rate is seen declining after 2017 as agricultural growth tapers off and other sectors remain lackluster.

“If the risk premium remains the way it is, you will not see any capital inflows. We are not very optimistic for 2018 and 2019. You cannot assume that you can have rains as good as this year on a continuous basis. Once agricultural growth comes down there is not much else to count on,” he said.

The bank said inflation is seen at 3.2 percent by end of the year, before accelerating to 9.6 percent at the end of 2018.